Department of Education Canceled About $ 500 Million Student Loans in New Borrower Protection Claims

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June 16 Department of Education announced approving the defense of 18,000 borrowers in repayment claims for individuals who attended a now defunct commercial educational institution, providing borrowers with a 100 percent loan repayment and providing approximately $ 500 million in assistance. The institution has been the subject of several investigations and settlements related to its private student loan practice, including allegations brought by the CFPB alleging that the institution forced borrowers to provide private student loans with high interest rates and high fees, knowing that borrowers could not afford them. (See InfoBytes Coverage of School-Related Issues. here as well as here.) According to the Department’s announcement, the approvals cover two categories of borrower claims related to employment prospects and loan transfer opportunities, and marks the “first approval by the Department of a new category of borrower protection claims since January 2017.” Among other things, the Department found that “the employment prospects of borrowers are not improved by attending” the school and that loans from the school are rarely transferred.

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